A mid-year report on the metropolitan area’s multifamily
sector shows there are signs of rising vacancy rates, lower rents as well as
some degree of worry about how many units under construction can get absorbed
and whether rents can keep up.
The Class A apartment market saw its vacancy rate increase
in the suburbs, Center City and South Jersey from mid-year 2013 to now,
according to Delta Associates, a research firm that tracks the multifamily
sector. Vacancy in Philadelphia went up to 5 percent while the suburbs it rose
to 4.5 percent and South Jersey to 5.7 percent.
Rents also didn’t fair well. In the closely watched Center
City market, where developers have dozens of projects underway and in the
pipeline, average monthly rents took a dip, falling by 1.6 percent to $2,141,
or $2.24 a square foot. In the Pennsylvania suburbs, rents notched up just a
tad — 0.1 percent — to $1,447, or $1.42 a square foot.
There is some caution regarding the number of projects in
the works in Philadelphia.
Delta projects that “36-month supply will slightly exceed
the number of units that will be absorbed in and around Center City by the end
of our 36-month forecast period." With about 5,025 units under
construction or on the drawing board, “Philadelphia’s supply-demand
relationship indicates that vacancy will continue to edge up slightly and rent
growth is likely to stay negative over the next 24 months.”
In spite of some of this initial concern about the number of
units that will eventually hit the market in Philadelphia, Delta is confident
that demographic trends toward renting and urban living will eventually support
what ultimately gets built.
Source: Philadelphia
Business Journal
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